Friday, January 13, 2012

More on Income Inequality

Key excerpts from the top White House economic adviser's presentation on the "mindboggling" magnitude and increasingly negative consequences of growing income inequality (via Ezra Klein):

Klein - This morning, Alan Krueger, the chairman of the President’s Council of Economic Advisers, gave a speech on inequality at the Center for American Progress. Prepared remarks here. Charts here. These are the parts that caught my eye:
- “I used to have an aversion to using the term inequality. The Wall Street Journal ran an article in the mid-1990s that noted that I prefer to use the term ‘dispersion’. But the rise in income dispersion – along so many dimensions – has gotten to be so high, that I now think that inequality is a more appropriate term.”

- “As the Congressional Budget Office noted in a recent report, the top 1 percent of families saw a 278 percent increase in their real after-tax income from 1979 to 2007, while the middle 60 percent had an increase of less than 40 percent.”

(Alan Krueger) 

- “We were growing together for the first three decades after World War II, but for the last three decades we have been growing apart. Here at CAP, I should point out that the pattern in the post-1970s period is not monolithic. . .the period from 1992 to 2000 was an exception, when strong economic growth and the policies of the Clinton administration led all quintiles to grow together again. Indeed, all income groups experienced their fastest income growth in years. I could also note, parenthetically, that there is no sign in these data that the tax increases in the early 1990s had an adverse effect on income growth.”

- “The magnitude of these shifts is mindboggling. The share of all income accruing to the top 1 percent increased by 13.5 percentage points from 1979 to 2007. This is the equivalent of shifting $1.1 trillion of annual income to the top 1 percent of families. Put another way, the increase in the share of income going to the top 1 percent over this period exceeds the total amount of income that the entire bottom 40 percent of households receives.”

Mitt Romney's Crazy Talk III

Jared Bernstein has it:

Everyone's got a right to their own opinions…but not to their own facts.

When Republican presidential candidate Mitt Romney asserted that federal low-income programs are administered so inefficiently that “very little of the money that’s actually needed by those that really need help, those that can’t care for themselves, actually reaches them,” my colleagues at the CBPP got to work on this graph.

It shows that “federal administrative costs range from less than 1 percent to 8 percent of total federal program spending.  Combined federal and state administrative costs range from 1 percent to 10 percent of total federal- and state-funded program spending.”

Gov Romney is singing from the same playbook as Rep Paul Ryan along with a litany of conservatives whose goal for years has been for the Federal gov’t to shed the responsibility for Medicaid, food stamps (SNAP), low-income housing, and so on.  Once you “block grant” these functions to the states, it’s easier to cut them.  And remember, this is from a candidate (and the same is true for the House R’s budget) that wants to cut taxes deeply for the richest households.

So he’s launching his attack based on inefficient administration—the claim that most of the dollars don’t reach the clients.  Trouble is, the facts got in the way.

Many people argue that Gov Romney is the reasonable R candidate…you might not love his policies, they tell me, but he’s not known for making stuff up, for repeating outrageous statements with no basis in fact.

OK, let’s see—if he keeps repeating this falsehood, then they’re wrong.